Seabee production shortfall pushes Claude into the red

A dramatic drop in gold production from the Seabee mine in Saskatchewan has taken its toll on Claude Resources‘ (CRJ-T) bottom line.

For the first six months of 2001, Claude recorded a rare net loss of $1.2 million ($0.03 per share) on revenues of $15.7 million. This compares with a $100,000 profit (nil per share) on revenues of $16.3 million during the same period last year.

The red ink was generated by a 25% fall in gold revenues, which more than offset a 68% increase in oil and gas revenues due to higher petroleum prices.

Seabee, the company’s sole gold producer, contributed $9.4 million in revenue during the first half of 2001, compared with $12.5 million during the same period last year.

Gold production at Seabee fell to just 22,800 oz. (from 133,019 tonnes averaging 6.3 grams) during the most recent six-month period. This was down from 30,100 oz. (derived from 116,470 tonnes averaging 8.85 grams per tonne) during the first half of 2000.

Seabee production was sold at an average of US$268 per oz. in the first six months, compared with US$283 per oz. during the same period last year.

The production shortfall is blamed on lower-than-expected ore grades from the D zone, which is the current area of mining at Seabee. The lower grades resulted in a 10% rise in cash operating costs to US$223 per oz.

The company is confident that production figures will rise as there will soon be the concurrent development of the B and C zones, which consistently grade higher than the D zone.

As a result of these changes, Claude’s production forecast for all of 2001 has been lowered to 50,100 oz. gold.

While the recent two quarters were not stellar, the company is blessed with a clean balance sheet. This allows it to withstand a few dry periods.

On June 30, current and long-term debt was only $600,000.

Claude also holds the Madsen property in the Red Lake gold camp in northwestern Ontario, where the company has a early-stage joint venture with operator Placer Dome.

The major recently started a second phase of drilling to assess the updip and/or up-plunge projection of the high-grade No. 8 zone. Results are expected in the coming fall.